8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 1, 2007

I.D. SYSTEMS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-15087	22-3270799
(State Or Other	(Commission	(IRS Employer
Jurisdiction Of	File Number)	Identification No.)
Incorporation)

One University Plaza, Hackensack, NJ	07601
(Address of Principal Executive Offices)	(Zip Code)
Registrant's telephone number, including area code	(201) 996-9000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 1, 2007, I.D. Systems, Inc. (the “Registrant”) issued a press release regarding results for the quarter ended September 30, 2007. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this report is being furnished pursuant to Item 2.02 of Form 8-K, insofar as it discloses historical information regarding the Registrant’s results of operations and financial condition as of, and for the quarter ended September 30, 2007. In accordance with General Instructions B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Forward Looking Statements

This Current Report on Form 8-K, including Exhibit 99.1, contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. Forward-looking statements represent our management’s judgment regarding future events. Although the Registrant believes that the expectations reflected in such forward-looking statements are reasonable, the Registrant can give no assurance that such expectations will prove to be correct. All statements other than statements of historical fact included in this Current Report on Form 8-K regarding our financial position, financial guidance, business strategy, products, markets, plans or objectives for future operations are forward-looking statements. The Registrant cannot guarantee the accuracy of the forward-looking statements, and you should be aware that the Registrant’s actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under the heading “Risk Factors” contained in the Registrant’s filings with the Securities and Exchange Commission.

Item 9.01. Financial Statements and Exhibits.

(d)Exhibits

As described above, the following Exhibit is furnished as part of this Current Report on Form 8-K:

Exhibit 99.1 - Press release dated November 1, 2007

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	I.D. SYSTEMS, INC.
Date: November 1, 2007	By:	/s/ Ned Mavrommatis
		Name: Ned Mavrommatis
		Title: Chief Financial Officer

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EX-99.1

FOR IMMEDIATE RELEASE	CONTACT:	Ned Mavrommatis, CFO
		201-996-9000; fax: 201-996-9144
		ned@id-systems.com

I.D. Systems, Inc. Reports Third Quarter Financial Results

Hackensack, NJ, November 1, 2007—I.D. Systems, Inc. (NASDAQ: IDSY) today announced its financial results for the third quarter of 2007. Revenues for the three months ended September 30, 2007, were $6.5 million, compared to $8.1 million for the three months ended September 30, 2006. GAAP net loss for the quarter was $790,000, or ($0.07) per basic and diluted share, compared to GAAP net income of $632,000, or $.06 per basic share and $.05 per diluted share, for the third quarter of 2006.

Non-GAAP net income for the third quarter of 2007was $43,000, or break-even on a per-share basis, compared to non-GAAP net income of $1.4 million, or $0.13 per basic share and $0.11 per diluted share, for the third quarter of 2006. Non-GAAP results were calculated by adjusting GAAP net income (loss) for the impact of stock-based compensation, which was $833,000 for the third quarter of 2007 and $785,000 for the third quarter of 2006. A table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures” is included in this press release.

“We are pleased with the quarter on several fronts,” said Jeffrey Jagid, I.D. Systems’ chairman and chief executive officer.  “We received significant repeat business from several of our core customers, for whom our unique wireless technology continues to provide economic benefits by controlling, tracking and managing industrial vehicles. Our newly expanded, restructured sales and marketing organization has also made significant strides toward achieving its goal of diversifying our customer base and sources of revenue. I am also pleased to note that our gross margins remain strong. We are optimistic about the fourth quarter as well, as we focus on continued growth and a smoother, more predictable stream of quarter-to-quarter revenue.”

For the quarter ended September 30, 2007, gross profit margin was 49.8%, compared to 44.3% for the corresponding period in 2006. 

Selling, general and administrative expenses for the quarter increased 26.6% to $4.0 million, compared to $3.2 million for the third quarter in 2006. The increase was attributable primarily to increased payroll and related expenses resulting from the hiring of additional employees to position the company for growth.

Research and development expenditures increased 23.0% to $828,000 for the third quarter of 2007, compared to $673,000 for the corresponding period in 2006. The increase was attributable primarily to work performed relating to the development of European standards-compliant products.

Interest income for the quarter was $784,000, compared to $860,000 for the same period in 2006.

For the nine-month period ended September 30, 2007, revenues were $13.4 million, compared to $20.8 million for the nine months ended September 30, 2006. Gross profit margin for the nine-month period was 48.8%, compared to 46.3% for the comparable period in 2006. GAAP net loss for the nine-month period was $4.9 million, or ($.43) per basic and diluted share, compared to GAAP net income of $938,000, or $0.09 per basic share and $0.08 per diluted share for the first nine months of 2006.

Adjusting for $2.4 million in stock-based compensation expenses, non-GAAP net loss for the nine months ended September 30, 2007, was $2.5 million, or ($0.22) per basic and diluted share. For the corresponding period in 2006, non-GAAP net income was $2.7 million, or $0.27 per basic share and $0.23 per diluted share, adjusting for $1.8 million in stock-based compensation expenses. A table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures” is included in this press release.

For the nine months ended September 30, 2007, SG&A expenses were $11.7 million compared to $8.8 million for the same period in 2006. The increase was attributable primarily to increased payroll and related expenses resulting from the hiring of additional employees. Research and development expenditures for the period were $2.1 million compared to $1.7 million for the nine months ended September 30, 2006. The increase was attributable primarily to an increase of $291,000 in stock-based compensation expense compared to the third quarter a year ago. Interest income for the first nine months of 2007 increased to $2.3 million from $1.7 million for the same period a year ago.

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As of September 30, 2007, I.D. Systems had $63.1 million in cash, cash equivalents and marketable securities, and $72.6 million of working capital, compared to $70.4 million and $80.0 million, respectively, as of December 31, 2006. The decrease in cash, cash equivalents and marketable securities was attributable primarily to the company’s stock repurchase program, announced on May 3, 2007.

Highlights of the third quarter ended September 30, 2007, included:

· Receipt of additional purchase orders from existing customers, including:

o Alcoa, which will deploy I.D. Systems’ patented Wireless Asset Net® industrial vehicle management system on a fleet of material handling equipment at its new manufacturing complex in Iceland, one of the most modern aluminum production facilities in the world;

o Wal-Mart Stores, Inc., which, as reported in a Form 8-K filed with the Securities and Exchange Commission on August 27, 2007, expanded its deployment of I.D. Systems’ Wireless Asset Net system to 13 additional sites, bringing the total number of Wal-Mart facilities utilizing the Wireless Asset Net to 21; and

· The decision by NACCO Materials Handling Group, Inc. (NMHG) to purchase and deploy I.D. Systems’ Wireless Asset Net system at its primary U.S. parts distribution center. As both a manufacturer and user of forklifts, NMHG chose the Wireless Asset Net to optimize the fleet of forklifts involved in its own material handling operations.

· Development of new prospective customers, including prominent industrial manufacturers and U.S. Government agencies.

· Execution of a strategic marketing agreement with RedPrairie Corporation, a leading supply chain software provider. By integrating I.D. Systems’ real-time wireless asset monitoring capabilities with RedPrairie’s backbone of supply chain optimization tools, the companies expect to achieve a synergy that will deliver unique economic benefits for both manufacturing and distribution enterprises.

· The launch of AvRamp™, a version of I.D. Systems’ Wireless Asset Net system branded specifically for the aircraft ground support equipment market. The culmination of approximately $6 million invested jointly by the U.S. Transportation Security Administration and I.D. Systems, AvRamp provides a combination of intelligent vehicle control, real-time asset visibility, directed workforce management, and cost-free wireless communications designed to optimize management of aircraft ground support vehicles and the people who operate them.

· The introduction of a new customer engagement program, called Advantage™ Support Services, designed to help customers target and quantify specific benefits to be realized by deploying I.D. Systems’ Wireless Asset Net industrial vehicle management system, and to help ensure those benefits are achieved and sustained following system deployment. The program has been well received, with several customers entering into multi-year contracts for the service.

Investor Conference Call

I.D. Systems will hold a conference call for investors and analysts at 4:15 p.m. Eastern Time on November 1, 2007. Jeffrey Jagid, chairman and CEO, will lead a discussion on the results of the quarter and recent developments. After opening remarks, there will be a question and answer period. The conference call will be broadcast live over the Internet via the Investors section of the company’s website at www.id-systems.com. To listen to the live call, go to the website at least 10 minutes early to download and install any necessary audio software.

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Non-GAAP Measures

To supplement its financial statements presented in accordance with GAAP, I.D. Systems provides certain non-GAAP measures of financial performance.  These non-GAAP measures include non-GAAP net income/loss and non-GAAP net income/loss per basic and diluted share.  Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results.  These non-GAAP measures are provided to enhance investors' overall understanding of I.D. Systems' current financial performance and provide further information for comparative information due to the adoption of accounting standard SFAS 123R.  Specifically, I.D. Systems believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook.  Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the financial tables included in this press release.

About I.D. Systems

Based in Hackensack, NJ, I.D. Systems, Inc. is a leading provider of wireless solutions for managing and securing high-value enterprise assets. These assets include industrial vehicles, such as forklifts and airport ground support equipment, and rental vehicles. The Company’s patented Wireless Asset Net system, which utilizes radio frequency identification, or RFID, technology, addresses the needs of organizations to control track, monitor and analyze their assets. For more information, visit www.id-systems.com.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that are subject to risk and uncertainties, including, but not limited to, future economic and business conditions, the loss of any of the Company’s key customers or reduction in the purchase of its products by any such customers, the failure of the market for the Company’s products to continue to develop, the inability to protect the Company’s intellectual property, the inability to manage the Company’s growth, the effects of competition from a wide variety of local, regional, national and other providers of wireless solutions and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2006. These risks could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. The Company assumes no obligation to update the information contained in this press release.

-- Tables to Follow --

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I.D. Systems, Inc.

GAAP Condensed Statements of Operations

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2006			2007			2006			2007
Revenue:
Products	$	5,751,000		$	5,466,000		$	14,465,000		$	8,481,000
Services		2,323,000			1,052,000			6,361,000			4,881,000
		8,074,000			6,518,000			20,826,000			13,362,000
Cost of Revenue:
Cost of products		2,995,000			2,725,000			7,245,000			4,282,000
Cost of services		1,504,000			546,000			3,930,000			2,564,000
		4,499,000			3,271,000			11,175,000			6,846,000
Gross Profit		3,575,000			3,247,000			9,651,000			6,516,000
Selling, general and administrative expenses		3,162,000			4,004,000			8,820,000			11,708,000
Research and development expenses		673,000			828,000			1,726,000			2,128,000
Loss from operations		(260,000	)		(1,585,000	)		(895,000	)		(7,320,000	)
Interest income		860,000			784,000			1,741,000			2,344,000
Interest expense		(6,000	)		(2,000	)		(23,000	)		(9,000	)
Other income		38,000			13,000			115,000			89,000
Net income (loss)	$	632,000		$	(790,000	)	$	938,000		$	(4,896,000	)
Net income (loss) per share - basic	$	0.06		$	(0.07	)	$	0.09		$	(0.43	)
Net income (loss) per share - diluted	$	0.05		$	(0.07	)	$	0.08		$	(0.43	)
Weighted average common shares outstanding - basic		11,202,000			11,150,000			10,238,000			11,265,000
Weighted average common shares outstanding - diluted		12,871,000			11,150,000			11,991,000			11,265,000

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I.D. Systems, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

	Three Months Ended September 30, 2006		Three Months Ended September 30, 2007			Nine Months Ended September 30, 2006		Nine Months Ended September 30, 2007
Net income (loss) attributable to common stockholders	$	632,000	$	(790,000	)	$	938,000	$	(4,896,000	)
Stock-based compensation		785,000		833,000			1,783,000		2,435,000
Non-GAAP net income (loss)	$	1,417,000	$	43,000		$	2,721,000	$	(2,461,000	)
Non-GAAP net income (loss) per share - basic	$	0.13	$	0.00		$	0.27	$	(0.22	)
Non-GAAP net income (loss) per share - diluted	$	0.11	$	0.00		$	0.23	$	(0.22	)

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I.D. Systems, Inc.

Condensed Balance Sheets

	December 31, 2006			September 30, 2007
				(Unaudited)
ASSETS
Cash and cash equivalents	$	9,644,000		$	3,681,000
Marketable securities		60,716,000			59,463,000
Accounts receivable, net		5,101,000			6,653,000
Unbilled receivables		1,042,000			131,000
Inventory		6,430,000			4,124,000
Officer loan		8,000			--
Interest receivable		179,000			101,000
Prepaid expenses and other current assets		271,000			362,000
Total current assets		83,391,000			74,515,000
Fixed assets, net		1,394,000			1,361,000
Deferred contract costs		33,000			8,000
Other assets		87,000			87,000
	$	84,905,000		$	75,971,000
LIABILITIES
Accounts payable and accrued expenses	$	2,950,000		$	1,537,000
Current portion of long term debt		221,000			75,000
Deferred revenue		221,000			310,000
Total current liabilities		3,392,000			1,922,000
Long term debt		19,000			--
Deferred revenue		133,000			182,000
Deferred rent		77,000			61,000
Total liabilities		3,621,000			2,165,000
STOCKHOLDERS' EQUITY
Preferred stock; authorized 5,000,000 shares, $.01 par value; none issued		--			--
Common stock; authorized 50,000,000 shares, $.01 par value; 11,337,000 and 11,549,000 issued at December 31, 2006 and September 30, 2007, respectively, shares outstanding, 11,297,000 and 11,052,000 at December 31, 2006 and September 30, 2007, respectively.		113,000			115,000
Additional paid-in capital		93,423,000			96,157,000
Accumulated deficit		(12,151,000	)		(17,047,000	)
Accumulated other comprehensive income		12,000			6,000
		81,397,000			79,231,000
Treasury stock; 40,000 shares and 497,000 shares at cost		(113,000	)		(5,425,000	)
Total stockholders’ equity		81,284,000			73,806,000
Total liabilities and stockholders’ equity	$	84,905,000		$	75,971,000

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I.D. Systems, Inc.

Statements of Cash Flows

(Unaudited)

	Nine months ended September 30,
	2006			2007
Cash flows from operating activities:
Net income (loss)	$	938,000		$	(4,896,000	)
Adjustments to reconcile net income (loss) to cash used in operating activities:
Inventory reserve		--			175,000
Accrued interest income		(41,000	)		120,000
Stock-based compensation expense		1,783,000			2,435,000
Depreciation and amortization expense		344,000			401,000
Deferred rent expense		(16,000	)		(16,000	)
Deferred revenue		83,000			138,000
Deferred contract costs		53,000			25,000
Changes in:
Accounts receivable		(1,461,000	)		(1,552,000	)
Unbilled receivables		(898,000	)		911,000
Inventory		(2,172,000	)		2,131,000
Prepaid expenses and other assets		(243,000	)		(91,000	)
Investment in sales type leases		467,000			--
Accounts payable and accrued expenses		(1,041,000	)		(1,757,000	)
Net cash used in operating activities		(2,204,000	)		(1,976,000	)
Cash flows from investing activities:
Purchase of fixed assets		(553,000	)		(368,000	)
Purchase of investments		(58,103,000	)		(10,940,000	)
Maturities of investments		3,364,000			12,145,000
Net cash (used in) provided by investing activities		(55,292,000	)		837,000
Cash flows from financing activities:
Repayment of term loan		(156,000	)		(165,000	)
Proceeds from exercise of stock options		718,000			301,000
Purchase of treasury shares		--			(4,968,000	)
Collection of officer loan		8,000			8,000
Net proceeds from stock offering		63,961,000			--
Net cash provided by (used in) financing activities		64,531,000			(4,824,000	)
Net increase (decrease) in cash and cash equivalents		7,035,000			(5,963,000	)
Cash and cash equivalents - beginning of period		2,138,000			9,644,000
Cash and cash equivalents - end of period	$	9,173,000		$	3,681,000
Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	23,000		$	9,000
Non-cash financing activity:
Shares withheld pursuant to stock issuances	$	-		$	344,000

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